Return on Investment

In all of EDR's work, the term return on investment (ROI) is synonymous with economic benefit as defined in statute. According to s. 288.005(1), F.S., economic benefit is defined as "the direct, indirect, and induced gains in state revenues as a percentage of the state's investment" - which includes "state grants, tax exemptions, tax refunds, tax credits, and other state incentives." This means that the analysis is performed from the state's perspective and is largely fiscal in nature. Issues of overall effectiveness or societal benefit are not addressed; instead, ROI focuses on tangible financial gains or losses to state revenues, and is ultimately conditioned by the state's tax policy. Typically, EDR's Statewide Model is used to estimate the ROI. The Statewide Model is a dynamic computable general equilibrium (CGE) model that simulates Florida's economy and government finances. Among other things, it captures the indirect and induced economic activity resulting from the direct project effects. This is accomplished by using large amounts of data specific to the Florida economy and fiscal structure. Mathematical equations are used to account for the relationships (linkages and interactions) between the various economic agents, as well as likely responses by businesses and households to changes in the economy.